Vedanta Limited, the metals, and mining company, is planning to raise Rs 2,100 crore by issuing non-convertible debentures (NCDs) on a private placement basis. The company's board of directors approved the plan in a meeting held on April 13, 2023. According to the company, the funds raised through NCDs would be used for general corporate purposes, including working capital requirements and capital expenditure.
Details of the NCD Issue
The proposed NCDs have a face value of Rs 10 lakh each and a tenure of 5 years. They will be issued in one or more tranches and will carry a coupon rate of 7.5% per annum. The issue is expected to open on April 20, 2023, and close on April 22, 2023.
Barclays mandates to raise Rs 1,500 crore loan
In another development, Vedanta has mandated Barclays to raise a loan of Rs 1,500 crore to refinance its existing debt. The loan will have a tenure of 5 years and will be priced at a spread over the 5-year benchmark government security yield.
The outlook for Vedanta
Vedanta has been focusing on deleveraging its balance sheet over the past few years. The company has reduced its net debt to EBITDA ratio to 1.2x as of March 31, 2022, from 3.3x as of March 31, 2019. The reduction in debt has been achieved through a combination of factors, including divestment of non-core assets, improvement in operating performance, and reduction in capital expenditure.
The company has also been focusing on improving its profitability through cost optimization measures and improving operational efficiencies. Vedanta is well-positioned to benefit from the expected recovery in global commodity prices, driven by the pick-up in economic activity.
Vedanta's plan to raise funds through NCDs and to refinance its existing debt is a positive development for the company. The funds raised through the NCDs will help the company meet its working capital requirements and fund its capital expenditure plans. The move to refinance its existing debt will help Vedanta reduce its interest costs and improve its profitability. With the expected recovery in global commodity prices, Vedanta is well-positioned to benefit from the pick-up in economic activity.
